Nautilus 2009 Annual Report Download - page 48

Table of Contents
Fitness Apparel Business
On April 18, 2008 the Company completed the sale of its fitness apparel business, Pearl iZumi. Operating results for Pearl iZumi, included in
loss from discontinued operations, are as follows:
The Company had an escrow deposit of $4.4 million related to the sale of Pearl iZumi, of which $2.0 million was released in August, 2009. In
the third quarter of 2009, the Company recorded a $0.4 million adjustment to the previously reported disposal of Pearl iZumi for additional
amounts due to the buyer under terms of the purchase agreement. The remaining escrow deposit balance of $2.0 million was released to the
Company in October 2009.
(3) RESTRUCTURING
During 2008, Nautilus implemented a number of initiatives to reduce operating costs and reorganize its operations, including measures to
restructure its workforce and terminate an agreement pursuant to which it was to acquire a manufacturing operation in China. In 2009, the
Company announced additional plans aimed at further reducing operating costs and improving the overall alignment of spending with
anticipated revenue. The 2009 plan impacted all functions through reductions in personnel and other initiatives, including the abandonment of
certain information technology software, the termination of certain leases and warehouse distribution services and the downsizing of the
Company’s leased corporate headquarters. Initiatives related to continuing operations are summarized below.
In 2009, the Company:
In 2008, the Company:
44
(In thousands) 2009 2008
Revenue
—
$
27,616
Income (loss) before income taxes
$
(377
)
$
3,016
Income tax expense
—
605
Income (loss) from discontinued operation
–
fitness apparel
$
(377
)
$
2,411
•
Restructured its workforce and reduced the number of employees to better match business requirements;
• Conducted a thorough review of its information technology costs to better align computer systems and support services to our
restructured business model, resulting in significant savings related to software purchases, maintenance agreements and licensing
fees;
• Terminated the lease for its corporate headquarters facility in Vancouver, Washington, and entered into a new lease for substantially
less space in the same building; and
• Terminated a warehouse distribution service agreement for U.S. service parts inventory, which will now be distributed from existing
Company locations;
•
Restructured its workforce to better match the business requirements;
•
Reviewed its product lines, eliminating low volume or low profit products;
•
Consolidated its U.S. distribution centers and aligned products by business segment to allow for more efficient product handling;
•
Transferred Canadian call center activities to its Vancouver, Washington call center; and
•
Terminated an agreement pursuant to which it was to acquire a manufacturing operation in China.